BP and Shell price-fixing investigation: Oil executives may face jail, warns David Cameron
Oil executives could face jail if they conspired to keep petrol prices high by rigging the market, David Cameron has warned.
The Prime Minister increased the pressure on BP and Shell by insisting that new legislation brought in after the Libor rate-fixing scandal could be applied to the oil market.
Following the European Commission’s raid on the companies’ offices over suspicions that they inflated oil and petrol prices for a decade, Mr Cameron said: “These are hugely concerning allegations and – if true – very, very serious.”
Mr Cameron, who was in New York on his final day of a United States tour, added that there would be “major consequences” if the claims proved to be accurate. The European Commission has said its “unannounced inspections” do not mean the companies are guilty and it is expected to take months to conclude the investigation.
But if allegations prove to be correct, oil-price rigging could have added more than £2,000 to the average household petrol bill over the past 10 years, Gustaf Duhs, of Stevens & Bolton, said. Shell saw nearly £3bn wiped off its market value in the aftermath of Tuesday’s raids on its offices in London and the Netherlands.
Seth Freedman, the man who blew the whistle on alleged price fixing in the gas market, told The Independent that the practice was also common in the oil industry. “Traders have told me there is a widespread problem of attempting to manipulate prices right across the energy complex, in oil, gas, carbon and coal,” Mr Freedman said.
The former city trader and price reporting agency employee – who regularly spoke to oil companies, banks, hedge funds and other players across the energy trading market – added: “Traders have named to me some of the world’s biggest energy companies as being notorious for attempting to manipulate energy prices, including oil.”
Ultimately, the price that people pay for oil, petrol and related products around the world is determined by a handful of “benchmarks”, of which the best known is Brent crude. So-called price-reporting agencies calculate the benchmark rate using data provided to them by oil companies, banks and hedge funds, which trade oil on a daily basis; the EC suspects these submissions were in some cases fraudulent.
The Office of Fair Trading also came under fire, less than four months after the watchdog’s investigation into the near doubling of pump prices in the previous decade found that “competition is working well in the UK road fuel sector”.
Robert Halfon, the Tory Harlow MP, derided the OFT inquiry as “limp-wristed and lettuce like” while Labour warned it would face “serious questions” if the EC now found evidence of rigging.
Energy Secretary Ed Davey defended the OFT as a “strong” watchdog, but said he was “deeply concerned by an allegation that prices for consumers could have been artificially or unnecessarily driven up”.
The OFT pointed out that its report suggested oil-price manipulation “could potentially raise serious concerns but no credible evidence was submitted to the OFT in response to the call for information”. The watchdog resisted calls to reopen its investigation, saying instead that it was assisting the Commission with its “inspections”.
Mr Cameron said guilty executives could be prosecuted under the Financial Services 2012 Act, which came into force last month.
- 1 What happens to your body when you give up sugar?
- 2 Drugs Live cannabis trial: Hash is less harmful than any other drug, expert claims
- 3 Turkish Airlines flight TK 726 crash-lands on Nepal runway amid dense fog
- 4 Penis size: Study revealing 'what's normal' sends international media into meltdown
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
Turkish Airlines flight TK 726 crash-lands on Nepal runway amid dense fog
Ayesha Ali death: Mother and her girlfriend found guilty of manslaughter of eight-year-old
George Clooney and Amal fail to get special treatment at New York restaurant
Cindy Crawford 'un-PhotoShopped' viral Marie Claire image was doctored, claims photographer
'A girl is more responsible for rape than a boy': The statement that shocked the world... except India
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
Ukip would cut billions from Scottish budget to fund English tax cuts
End of the licence fee: BBC to back radical overhaul of how it is funded
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
£25000 - £35000 per annum: Recruitment Genius: This firm are focussed on assis...
£7 per hour: Recruitment Genius: A vacancy has arisen for a General Processor ...
£18000 - £22000 per annum: Recruitment Genius: A great opportunity has arisen ...
£14000 - £16000 per annum: Recruitment Genius: Full time and Part time positio...